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Solution - Pro-rata Allotment

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To provide employment to the youth and to develop the Naxal affected backward areas of Chhattisgarh. X Ltd. decided to set-up a power plant. For raising funds the company decided to issue 7, 50,000 equity shares of Rs.10 each at a premium of 50%. The whole amount was payable on application. Applications for 20,00,000 shares were received. Applications for 50,000 shares were rejected and shares were allotted to the remaining applicants on pro-rata basis.

Pass necessary journal entries for the above transactions in the books of the company and identify any two values which X Ltd. wants to propagate.

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To provide employment to the youth and to develop a backward area of Jharkhand which is near one of the coal mines, Thermal Power Energies Ltd. decided to set-up a Thermal Power Plant of 500 mega watt capacities. The company decided to issue 10,00,000 equity shares of Rs.10 each at a premium of 70% to finance the project.

Applications for 17,00,000 shares were received. Applications for 5, 00,000 shares were rejected and money refunded. Shares were allotted on pro-rata basis to the remaining applicants. The whole of share money was payable on application.

Pass necessary journal entries for the above transactions in the books of the company and identify any two values which the company wants to convey to the society.

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